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Tag: Jerome Powell

  • The Gen Z hiring nightmare is real, but AI is a ‘lightning strike’ not a ‘house fire,’ Yale economist says | Fortune

    Especially alarming to many has been AI’s effect on entry-level jobs. A blockbuster Stanford study in August was especially rattling, as it claimed to find a “significant and disproportionate impact” on entry-level jobs most exposed to AI automation—like software development and customer service—have seen steep relative declines in employment. This came out close to the MIT study that said 95% of generative AI pilots were failing and the somewhat sudden realization that AI could be building toward a bubble. Even Federal Reserve Chair Jerome Powell sees something going on, commenting that “kids coming out of college and younger people, minorities, are having a hard time finding jobs.”

    But according to a new study from Yale and Brookings researchers, these instances are “lightning strikes,” as opposed to “house fires,”. The U.S. labor market just isn’t showing any signs of broad, AI-driven disruption, at least not yet.

    Martha Gimbel, a Yale economist and the paper’s lead author, hopes that understanding this data helps people to relax. “Take a step back. Take a deep breath,” Martha Gimbel, a Yale economist and the paper’s lead author, told Fortune. “Try to respond to AI with data, not emotion.”

    No apocalypse yet

    The new study examined multiple measures of labor market disruption, drawing on Bureau of Labor Statistics (BLS) data on job losses, spells of unemployment, and shifts in broader occupational composition. The conclusion: there’s movement, but nothing out of the ordinary.

    While the mix of occupations has shifted slightly in the past years, the authors stress that this change is still well within historical norms. Right now, the forces driving those shifts appear to be macroeconomic rather than technological.

    “The biggest forces hitting the labor market right now are a slowing economy, an aging population, and a decline in immigration—not AI,” Gimbel said.

    It’s easy to conflate noise in the economy with the impact of AI, particularly for younger workers, who may already be feeling the pinch from a cooling job market. But Gimbel stressed that these effects are “very specific impacts in very targeted populations,” but there aren’t any broad impacts of AI for young workers, which are more consistent with a macroeconomic slowdown.

    Economists — including Fed Chair Jerome Powell — have described the current labor market conditions as a “low hire, low-fire” environment, where layoffs are rare, but so are new opportunities. Recent college graduates have been taking the hit: they are struggling to find entry-level roles in white-collar sectors like tech and professional services, and the youth unemployment rate has climbed to 10.5%, the highest since 2016. But the effect has hit older workers, too, more than a quarter of unemployed Americans have been out of work for over six months, the highest since the mid-2010s outside of the pandemic years. 

    Exposure to AI does not mean job loss

    It’s not surprising, then, that many workers assume AI must already be responsible. But Gimbel argues one of the biggest misconceptions is conflating exposure to AI with displacement. Radiologists illustrate the point. Once seen as automation’s prime victims, they are more numerous and better paid than ever, even as their workflows rely heavily on AI-powered imaging tools.

    “Exposure to AI doesn’t mean your job disappears,” she said. “It might mean your work changes.”

    The same applies to coders and writers, who dominate AI adoption rates on platforms like Claude, the researchers found. Using the tools doesn’t automatically train away your livelihood—it could simply reshape how the work is done.

    Molly Kinder, Gimbel’s co-author at Brookings, added another layer: geography. Americans are used to thinking about automation as something that devastates factory towns in the heartland. With generative AI, Kinder said, the geography is flipped.

    “This is not your grandparents’ automation,” Kinder told Fortune. “GenAI is more likely to disrupt—positively or negatively—big cities with clusters of knowledge and tech jobs, not the industrial heartland.”

    In her view, cities like San Francisco, Boston, and New York, dense with coders, analysts, researchers, and creatives, are far more exposed to generative AI than smaller towns. But whether that exposure turns into devastation or growth depends on the future.

    “If humans remain in the loop, those cities could reap the most benefits,” Kinder said. “If not, they’ll feel the worst pain.”

    The key, she emphasizes, is that exposure doesn’t tell us whether jobs will actually be eliminated, rather,  it only tells us which tasks could change. The real story will depend on whether companies treat AI as a helper or as a replacement.

    Lightning strikes, not a house fire

    Kinder, like Gibbel, stressed that diffusion takes time. Even as AI systems improve quickly, most organizations haven’t redesigned their workflows around them.

    “Even though it feels like AI is getting so good, turning that into change in the workplace is time-consuming,” she said. “It’s messy. It’s uneven.”

    That’s why the Yale-Brookings analysis is deliberately broad. “It can tell if the house is on fire,” Kinder explained. “It can’t pick up a stove fire in the kitchen. And right now, the labor market as a house is not on fire.”

    That doesn’t mean there’s nothing to see here, however.

    Kinder called today’s changes, like the ones the Stanford study picked up, “lightning strikes” in specific industries like software development, customer service, and creative work. These early jolts serve as canaries in the coal mine. But they haven’t aggregated into the kind of disruption that reshapes official job statistics.

    “Our paper does not say there’s been no impact,” she said. “A translator might be out of work, a creative might be struggling, a customer service rep might be displaced. Those are real. But it’s not big enough to add up to the economy-wide apocalypse people imagine.”

    Both Kinder and Gimbel said they expect the first clear, systemic effects to take years, not months, to appear.

    What comes next

    If and when real displacement arrives, both authors believe it will come from embedded AI in enterprise workflows, not from individual workers casually using chatbots.

    “That’s when you’ll see displacement,” Kinder said. “Not when one worker turns to a chatbot, but when the business redesigns the workflow with AI.”

    That process is beginning, as more companies integrate AI APIs into core systems. But organizational change is slow. 

    “Three years is nothing for a general-purpose technology,” Kinder said. “GenAI has not defied gravity. It takes time to redesign workflows, and it takes time to diffuse across workplaces. It could end up being phenomenally transformative, but it’s not happening overnight.”

    Eva Roytburg

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  • How the government shutdown disrupts critical economic data

    The government shutdown that began Wednesday will deprive policymakers and investors of economic data vital to their decision-making at a time of unusual uncertainty about the direction of the U.S. economy.The absence will be felt almost immediately, as the government’s monthly jobs report scheduled for release Friday will likely be delayed. A weekly report on the number of Americans seeking unemployment benefits — a proxy for layoffs that is typically published on Thursdays — will also be postponed.If the shutdown is short-lived, it won’t be very disruptive. But if the release of economic data is delayed for several weeks or longer, it could pose challenges, particularly for the Federal Reserve. The Fed is grappling with where to set a key interest rate at a time of conflicting signals, with inflation running above its 2% target and hiring nearly ground to a halt, driving the unemployment rate higher in August.The Fed typically cuts this rate when unemployment rises, but raises it — or at least leaves it unchanged — when inflation is rising too quickly. It’s possible the Fed will have little new federal economic data to analyze by its next meeting on Oct. 28-29, when it is widely expected to reduce its rate again.“The job market had been a source of real strength in the economy but has been slowing down considerably the past few months,” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “It would be very good to know if that slowdown was continuing, accelerating, or reversing.”The Fed cut its rate by a quarter-point earlier this month and signaled it was likely to do so twice more this year. Fed officials said they would keep a close eye on how inflation and unemployment evolve, but that depends on the data being available.A key inflation report is scheduled for Oct. 15 and the government’s monthly retail sales report is slated for release the next day.“We’re in a meeting-by-meeting situation, and we’re going to be looking at the data,” Fed Chair Jerome Powell said during a news conference earlier this month.The economic picture has recently gotten cloudier. Despite slower hiring, there are signs that overall economic growth may be picking up. Consumers have stepped up their shopping and the Federal Reserve Bank of Atlanta estimates the economy likely expanded at a healthy clip in the July-September quarter, after a large gain in the April-June period.A key question for the Fed is whether that growth can revive the job market, which this Friday’s report might have helped illustrate. Economists had forecast another month of weak hiring, with just 50,000 new positions added, according to a survey by FactSet. The unemployment rate was projected to stay at a still-low 4.3%.On Wall Street, investors obsess over the monthly jobs reports, typically issued the first Friday of every month. It’s a crucial indicator of the economy’s health and provides insights into how the Fed might adjust interest rates, which affects the cost of borrowing and influences how investors allocate their money.So far, investors don’t seem fazed by the shutdown. The broad S&P 500 stock index rose slightly Wednesday to an all-time high.Many businesses also rely on government data to gauge how the economy is faring. The Commerce Department’s monthly report on retail sales, for example, is a comprehensive look at the health of U.S. consumers and can influence whether companies make plans to expand or shrink their operations and workforces.For the time being, the Fed, economists, and investors will likely focus more on private data.On Wednesday, the payroll provider ADP issued its monthly employment data, which showed that businesses cut 32,000 jobs in September — a signal the economy is slowing. Still, ADP chief economist Nela Richardson said her firm’s report “was not intended to be a replacement” for government statistics.The ADP data does not capture what’s happening at government agencies, for example — an area of the economy that could be significantly affected by a lengthy shutdown.“Using a portfolio of private sector and government data gives you a better chance of capturing a very complicated economy in a complex world,” she said.The Fed will remain open no matter how long the shutdown lasts, because it funds itself from earnings on the government bonds and other securities it owns. It will continue to provide its monthly snapshots of industrial production, which includes mining, manufacturing, and utility output. The next industrial production report will be released Oct. 17.

    NEW YORK —

    The government shutdown that began Wednesday will deprive policymakers and investors of economic data vital to their decision-making at a time of unusual uncertainty about the direction of the U.S. economy.

    The absence will be felt almost immediately, as the government’s monthly jobs report scheduled for release Friday will likely be delayed. A weekly report on the number of Americans seeking unemployment benefits — a proxy for layoffs that is typically published on Thursdays — will also be postponed.

    If the shutdown is short-lived, it won’t be very disruptive. But if the release of economic data is delayed for several weeks or longer, it could pose challenges, particularly for the Federal Reserve. The Fed is grappling with where to set a key interest rate at a time of conflicting signals, with inflation running above its 2% target and hiring nearly ground to a halt, driving the unemployment rate higher in August.

    The Fed typically cuts this rate when unemployment rises, but raises it — or at least leaves it unchanged — when inflation is rising too quickly. It’s possible the Fed will have little new federal economic data to analyze by its next meeting on Oct. 28-29, when it is widely expected to reduce its rate again.

    “The job market had been a source of real strength in the economy but has been slowing down considerably the past few months,” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “It would be very good to know if that slowdown was continuing, accelerating, or reversing.”

    The Fed cut its rate by a quarter-point earlier this month and signaled it was likely to do so twice more this year. Fed officials said they would keep a close eye on how inflation and unemployment evolve, but that depends on the data being available.

    A key inflation report is scheduled for Oct. 15 and the government’s monthly retail sales report is slated for release the next day.

    “We’re in a meeting-by-meeting situation, and we’re going to be looking at the data,” Fed Chair Jerome Powell said during a news conference earlier this month.

    The economic picture has recently gotten cloudier. Despite slower hiring, there are signs that overall economic growth may be picking up. Consumers have stepped up their shopping and the Federal Reserve Bank of Atlanta estimates the economy likely expanded at a healthy clip in the July-September quarter, after a large gain in the April-June period.

    A key question for the Fed is whether that growth can revive the job market, which this Friday’s report might have helped illustrate. Economists had forecast another month of weak hiring, with just 50,000 new positions added, according to a survey by FactSet. The unemployment rate was projected to stay at a still-low 4.3%.

    On Wall Street, investors obsess over the monthly jobs reports, typically issued the first Friday of every month. It’s a crucial indicator of the economy’s health and provides insights into how the Fed might adjust interest rates, which affects the cost of borrowing and influences how investors allocate their money.

    So far, investors don’t seem fazed by the shutdown. The broad S&P 500 stock index rose slightly Wednesday to an all-time high.

    Many businesses also rely on government data to gauge how the economy is faring. The Commerce Department’s monthly report on retail sales, for example, is a comprehensive look at the health of U.S. consumers and can influence whether companies make plans to expand or shrink their operations and workforces.

    For the time being, the Fed, economists, and investors will likely focus more on private data.

    On Wednesday, the payroll provider ADP issued its monthly employment data, which showed that businesses cut 32,000 jobs in September — a signal the economy is slowing. Still, ADP chief economist Nela Richardson said her firm’s report “was not intended to be a replacement” for government statistics.

    The ADP data does not capture what’s happening at government agencies, for example — an area of the economy that could be significantly affected by a lengthy shutdown.

    “Using a portfolio of private sector and government data gives you a better chance of capturing a very complicated economy in a complex world,” she said.

    The Fed will remain open no matter how long the shutdown lasts, because it funds itself from earnings on the government bonds and other securities it owns. It will continue to provide its monthly snapshots of industrial production, which includes mining, manufacturing, and utility output. The next industrial production report will be released Oct. 17.

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  • Bitcoin (BTC) Stopped at $113K, ASTER Pumps by Double Digits: Market Watch

    Bitcoin experienced a minor price decline over the past 24 hours. It failed in its attempt to cross $113,000 and, at one point, even tumbled below $111,500.

    Many of the leading altcoins are also in the red. Some exceptions, which have registered substantial price increases, include Aster (ASTER) and Immutable (IMX).

    Another Volatile Day for BTC

    Bitcoin’s price has been shaky throughout the past 24 hours. Yesterday (September 23), it surpassed $113,000, but that uptick was short-lived and gave way by another correction, which took the asset to as low as $111,400.

    The pullback followed comments from Fed Chairman Jerome Powell, who shared some worrying details about the American economy, including weakness in the labor market. He also claimed that the prices of stocks and other assets appear “fairly highly valued.” 

    The bulls, though, stopped BTC’s free fall and pushed the price to just south of $113,000. Over the past few hours, there has been another slight retreat, and as of press time, the asset trades at approximately $112,400.

    BTC Price, Source: CoinGecko

    Bitcoin’s market capitalization holds steady at roughly $2.24 trillion, nearly unchanged from yesterday, while its dominance over the altcoins stands at 56.16%.

    These Alts Head North

    The majority of the well-known altcoins have followed BTC’s steps and also posted losses over the past day. Ethereum (ETH) slipped 1% to under $4,200, Solana (SOL) is down 4% to $210, whereas Hyperliquid (HYPE) nosedived by 10% and is currently trading below $44. 

    However, it’s not all doom and gloom, as some are at the forefront of gains. ASTER – the cryptocurrency of the recently-launched decentralized exchange for trading perpetual futures contracts Aster – has exploded by 40% and is now worth around $2.33, while Immutable (X) has jumped by 10% to reach $0.75.

    Other altcoins in the green (albeit registering less substantial increases) include Quant (QNT), Sky (SKY), and Pi Network (PI). 

    The total market capitalization of the cryptocurrency sector has declined by 0.7% and stands at roughly $3.98 trillion.

    Cryptocurrency Market Overview
    Cryptocurrency Market Overview. Source: QuantifyCrypto
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    Cryptocurrency charts by TradingView.

    Dimitar Dzhondzhorov

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  • Powell signals Federal Reserve to move slowly on interest rate cuts | Long Island Business News

    In Brief:
    • Powell warns against cutting rates too aggressively, citing inflation risks
    • Trump appointees Miran and Bowman push for faster, deeper cuts
    • Fed cut its key rate to 4.1% last week, first reduction this year
    • Divisions deepen within Fed as job market softens and inflation lingers

    Federal Reserve Chair Jerome Powell on Tuesday signaled a cautious approach to future interest rate cuts, in sharp contrast with other Fed officials this week who have called for a more urgent approach.

    In remarks in Providence, Rhode Island, Powell noted that there are risks to both of the Fed’s goals of seeking maximum employment and stable prices. But with the unemployment rate rising, he noted, the Fed agreed to cut its key rate last week. Yet he did not signal any further cuts on the horizon.

    If the Fed were to cut rates “too aggressively,” Powell said, “we could leave the inflation job unfinished and need to reverse course later” and raise rates. But if the Fed keeps its rate too high for too long, “the labor market could soften unnecessarily,” he added.

    Powell’s remarks echoed the caution he expressed during a news conference last week, after the Fed announced its first rate cut this year. At that time he said, “it’s challenging to know what to do.”

    The careful approach he outlined is quite different from that of some other members of the Fed’s rate-setting committee, particularly those who were appointed by President Donald Trump, who are pushing for faster cuts. On Monday, Stephen Miran said the Fed should quickly reduce its rate to as low as 2% to 2.5%, from its current level of about 4.1%. Miran was appointed by Trump this month and rushed through the Senate, taking his seat just hours before the Fed met last Tuesday. He is also a top adviser in the Trump administration and expects to return to the White House after his term expires in January, though Trump could appoint him to a longer term.

    And earlier Tuesday, Fed governor Michelle Bowman also said the central bank should cut more quickly. Bowman, who was appointed by Trump in his first term, said inflation appears to be cooling while the job market is stumbling, a combination that would support lower rates.

    When the Fed cuts its key rate, it often over time reduces other borrowing costs for things like mortgages, car loans, and business loans.

    “It is time for the (Fed) to act decisively and proactively to address decreasing labor market dynamism and emerging signs of fragility,” Bowman said in a speech in Asheville, North Carolina. “We are at serious risk of already being behind the curve in addressing deteriorating labor market conditions. Should these conditions continue, I am concerned that we will need to adjust policy at a faster pace and to a larger degree going forward.”

    Yet Powell’s comments showed little sign of such urgency. Other Fed officials have also expressed caution about cutting rates too fast, reflecting deepening divisions on the rate-setting committee.

    On Tuesday, Austan Goolsbee, president of the Federal Reserve’s Chicago branch, said in an interview on CNBC that the Fed should move slowly given that inflation is above its 2% target.

    “With inflation having been over the target for 4 1/2 years in a row, and rising, I think we need to be a little careful with getting overly up-front aggressive,” he said.

    Last week the Fed cut its key rate for the first time this year to about 4.1%, down from about 4.3%, and policymakers signaled they would likely reduce rates twice more. Fed officials said in a statement that their concerns about slower hiring had risen, though they noted that inflation is still above their 2% target.

    In a question and answer session, Powell said that tariffs, so far, have had a fairly limited impact on inflation, though he suggested that could change.

    He said U.S. companies are paying most of the tariffs, which contradicts Trump administration claims that overseas companies are shouldering the payments. But he said that the pass-through of tariff costs to consumers “has been later and less than we expected.”

    He also said the Fed continues to tune out attacks against it and added that the Fed does not consider politics when making its decisions. Powell and the Fed have been under steady attack from Trump, though Powell did not name him.

    “Whenever we make decisions, we’re never, ever thinking about political things,” Powell said. “Truth is, mostly people who are calling us political, it’s just a cheap shot. … We don’t get into back and forth with external people.”


    The Associated Press

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  • It’s not only Sam Altman anymore warning about an AI bubble. Mark Zuckerberg says a ‘collapse’ is ‘definitely a possibility’ | Fortune

    Deutsche Bank called it “the summer AI turned ugly.” For weeks, with every new bit of evidence that corporations were failing at AI adoption, fears of an AI bubble have intensified, fueled by the realization of just how topheavy the S&P 500 has grown, along with warnings from top industry leaders. An August study from MIT found that 95% of AI pilot programs fail to deliver a return on investment, despite over $40 billion being poured into the space. Just prior to MIT’s report, OpenAI CEO Sam Altman rang AI bubble alarm bells, expressing concern over the overvaluation of some AI startups and the intensity of investor enthusiasm. These trends have even caught the attention of Fed Chair Jerome Powell, who noted that the U.S. was witnessing “unusually large amounts of economic activity” in building out AI capabilities. 

    Mark Zuckerberg has some similar thoughts. 

    The Meta CEO acknowledged that the rapid development of and surging investments in AI stands to form a bubble, potentially outpacing practical productivity and returns and risking a market crash. But Zuckerberg insists that the risk of over-investment is preferable to the alternative: being late to what he sees as an era-defining technological transformation.

    “There are compelling arguments for why AI could be an outlier,” Zuckerberg hedged in an appearance on the Access podcast. “And if the models keep on growing in capability year-over-year and demand keeps growing, then maybe there is no collapse.”

    Then Zuckerberg joined the Altman camp, saying that all capital expenditure bubbles like the buildout of AI infrastructure, seen largely in the form of data centers, tend to end in similar ways. “But I do think there’s definitely a possibility, at least empirically, based on past large infrastructure buildouts and how they led to bubbles, that something like that would happen here,” Zuckerberg said.

    Bubble echoes

    Zuckerberg pointed to past bubbles, namely railroads and the dot-com bubble, as key examples of infrastructure buildouts leading to a stock-market collapse. In these instances, he claimed that bubbles occurred due to businesses taking on too much debt, macroeconomic factors, or product demand waning, leading to companies going under and leaving behind valuable assets. 

    The Meta CEO’s comments echoed Altman’s, who has similarly cautioned that the AI boom is showing many signs of a bubble. 

    “When bubbles happen, smart people get overexcited about a kernel of truth,” Altman told The Verge, adding that AI is that kernel: transformative and real, but often surrounded by irrational exuberance. Altman has also warned that “the frenzy of cash chasing anything labeled ‘AI’” can lead to inflated valuations and risk for many. 

    The consequences of these bubbles are costly. During the dot-com bubble, investors poured money into tech startups with unrealistic expectations, driven by hype and a frenzy for new internet-based companies. When the results fell short, the stocks involved in the dot-com bubble lost more than $5 trillion in total market cap.

    An AI bubble stands to have similarly significant economic impacts. In 2025 alone, the largest U.S. tech companies, including Meta, have spent more than $155 billion on AI development. And, according to Statista, the current AI market value is approximately $244.2 billion.

    But, for Zuckerberg, losing out on AI’s potential is a far greater risk than losing money in an AI bubble. The company recently committed at least $600 billion to U.S. data centers and infrastructure through 2028 to support its AI ambitions. According to Meta’s chief financial officer, this money will go towards all of the tech giant’s US data center buildouts and domestic business operations, including new hires. Meta also launched its superintelligence lab, recruiting talent aggressively with multi-million-dollar job offers, to develop AI that outperforms human intelligence.

    “If we end up misspending a couple hundred billion dollars,  that’s going to be very unfortunate obviously. But I would say the risk is higher on the other side,” Zuckerberg said. “If you build too slowly, and superintelligence is possible in three years but you built it out were assuming it would be there in five years, then you’re out of position on what I think is going to be the most important technology that enables the most new products and innovation and value creation in history.”

    While he sees the consequences of not being aggressive enough in AI investing outweighing overinvesting, Zuckerberg acknowledged that Meta’s survival isn’t dependent upon AI’s success.

    For companies like OpenAI and Anthropic, he said “there’s obviously this open question of to what extent are they going to keep on raising money, and that’s dependent both to some degree on their performance and how AI does, but also all of these macroeconomic factors that are out of their control.”

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    Lily Mae Lazarus

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  • Bitcoin Bulls Eye Next Big Move As Price Nears $118,000, New ATH In Sight?

    Bitcoin is targeting the $118,000 level, reigniting bullish momentum and fueling speculation of a potential push toward a new all-time high. With buyers regaining control after recent volatility, this breakout could open the path toward $120,000 and beyond.

    Pullback Seen As Final Shakeout Before Rally

    Crypto VIP Signal, in a recent update, pointed out that Bitcoin experienced a sharp pullback yesterday after news of a rate cut, coupled with remarks from Jerome Powell, triggered a wave of volatility. The decline caught the attention of traders across the market, but the expert’s analysis suggests that this movement is more likely a final shakeout rather than the start of a broader correction. 

    Interestingly, despite the pullback, Bitcoin has quickly shown signs of resilience. This recovery suggests that the underlying demand for BTC remains intact, and market participants are still confident about its bullish trajectory. 

    Crypto VIP Signal emphasized that the most critical level to watch in the short term is $118,000. A successful breakout above this resistance would serve as a strong bullish confirmation, potentially accelerating the rally toward $120,000. If achieved, this would not only mark another key milestone but also signal that Bitcoin remains firmly within a bullish cycle, raising the likelihood of a new all-time high on the horizon. 

    Bitcoin Bollinger Bands Signal Possible Path To $120,000

    Based on the latest BTC update from EGRAG CRYPTO, the bullish outlook for Bitcoin is being reinforced by key technical indicators. The report highlights that a decisive close above the middle upper section of the Bollinger Bands (BB) could be the catalyst needed to propel the price higher. 

    Analysts often interpret this technical formation as a sign of building momentum and can spark a breakout from a period of consolidation. If Bitcoin successfully achieves this, it would pave the way for a run toward the significant $120,000 resistance level.

    The update paints a highly optimistic picture for the short term, suggesting that a new record could be within reach. According to EGRAG CRYPTO, should BTC manage to break through and sustain a price above $120,000 today, it may set a new all-time high. Basically, this milestone might trigger a fresh wave of investor excitement and market liquidity as the price moves into uncharted territory.

    Despite the strong bullish sentiment, the analysis includes a critical warning for traders. The $117,300 mark is identified as a crucial level to watch. If the price encounters a strong rejection at this point, it could trigger a temporary reversal to the $113,300 support level.

    Bitcoin

    Godspower Owie

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  • Jerome Powell on signs of an AI bubble and an economy leaning too hard on the rich: ‘Unusually large amounts of economic activity’ | Fortune

    For months, Wall Street commentators have fretted that the artificial intelligence boom looks like a bubble, with capital spending – which some analysts estimate could reach $3 trillion by 2028 – fattening a few mega-cap firms, while lower-income workers suffer from a slack labor market. 

    On Wednesday, they got validation from an unlikely source: the chair of the Federal Reserve. 

    Jerome Powell said the U.S. is seeing “unusually large amounts of economic activity through the AI buildout,” a rare acknowledgement from the central bank that the surge is not only outsized, but also skewed toward the wealthy.

    That imbalance extends beyond markets. Roughly 70% of U.S. economic growth comes from consumer spending, yet most households live paycheck to paycheck. That demand picture has taken on a shape that analysts call  K-shaped: while many families cut back on essentials, wealthier households continue to spend on travel, tech, and luxury goods—and they continued to do so in August. For now, the inflation recovery depends heavily on this dynamic remaining in fragile stasis. It’s a fix that works well until it doesn’t, if it could be described as working at all.

    “[Spending] may well be skewed toward higher-earning consumers,” Powell told reporters after the Fed’s latest policy meeting. “There’s a lot of anecdotal evidence to suggest that.”

    That skew has become increasingly obvious in markets. Just seven firms — Microsoft, Nvidia, Apple, Alphabet, Meta, Amazon, and Tesla — now make up more than 30% of the S&P 500’s value. Their relentless AI capex is keeping business investment positive, even as overall job growth has slowed to a crawl. Goldman Sachs estimates AI spending accounted for nearly all of the 7% year-over-year gain in corporate capex this spring.

    The comments underscore a widening concern at the Fed: that while headline GDP growth is holding above 1.5%, the composition of that growth is uneven, unlike previous booms in housing or manufacturing. 

    Powell pointed to “kids coming out of college and younger people, minorities” as struggling to find jobs in today’s cooling labor market, even as affluent households continue to spend freely and companies funnel cash into cutting-edge technologies.

    The imbalance reflects what Powell described as “a low firing, low hiring environment,” where layoffs remain rare but job creation has slowed to a crawl. That dynamic, combined with the concentration of economic gains in AI and among the wealthy, risks deepening inequality, and complicates the Fed’s attempt to balance its inflation and employment mandates.

    That disconnect risks widening the gap between Wall Street and Main Street. While affluent households continue to spend freely and tech titans pour billions into data centers and chips, revised jobs data show the economy added just 22,000 positions in August, with unemployment edging up to 4.3%.

    “Unusually large” AI investment may sustain top-line growth, Powell suggested, but it’s doing little to lift the broad labor market.

    “The overall job finding rate is very, very low,” he said. “If layoffs begin to rise, there won’t be a lot of hiring going on.”

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    Eva Roytburg

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  • Fed Chair Powell Says AI Probably a Factor in Concerning Unemployment Rates

    The Fed decided to cut interest rates on Wednesday, citing a weak labor market as the reason.

    The latest jobs report showed that U.S. employers only added 22,000 jobs in August, down from the 79,000 in July, showing a dramatic slowing in hiring. It was the worst August report since the pandemic and it got the Federal Reserve Board concerned.

    In a press conference on Wednesday, Fed Chair Jerome Powell was asked whether he thinks AI has any effect on this trend. Powell said that although there is still great uncertainty over that link, he believes that it’s “probably a factor,” particularly when it comes to young graduates who are facing massive unemployment rates.

    “It may be that companies or other institutions that have been hiring younger people right out of college are able to use AI more than they had in the past; that may be a part of the story,” Powell said.

    The New York Fed had released a report earlier this year saying that the labor market for 22 to 27-year-olds had “deteriorated noticeably in the first quarter of 2025.”

    The connection between employment and AI is not surprising if you’ve been following along with the news and the countless anecdotal (and now increasingly data-driven) evidence, but it’s a worthy admission coming from the head of the most powerful economic institution in the country.

    A Stanford study from August found that early-career workers aged 22 to 25 in the most AI-exposed jobs experienced more relative decline in employment than other categories.

    Executives have been open about their desire to slow down hiring in favor of automating tasks with AI. Ford CEO Jim Farley made one of the boldest claims about that earlier this summer when he predicted that AI was going to replace “literally half of all white-collar workers in the U.S.”

    Earlier this year, Shopify CEO Tobias Lütke told hiring managers that they had to explain why AI couldn’t do the job before they could hire human workers for it. Generative AI is particularly good at basic tasks that, say, a recent graduate might be expected to complete as an entry-level worker.

    The most recent addition to the list of pro-AI labor companies came on Wednesday, when online freelancer marketplace Fiverr announced that it was laying off about 250 full-time staff members to become an “AI-first company.”

    “There is a real fear that I have that an entire cohort, those graduating during the early AI transition, may kind of be a lost generation, unless policy, education, and hiring norms adjust,” Cornell University associate professor of global labor John McCarthy told Gizmodo in July. “And I’m not tremendously optimistic about those adjustments happening at the scale they need to.”

    Any data that clearly shows a link between AI and the slowdown in hiring would be the first step to addressing concerns. Earlier this month, a group of more than 40 leading economists signed an open letter to Labor Secretary Lori Chavez-DeRemer to make data collection on AI’s impact on the labor markets “a top priority.”

    The Fed has been conducting its own research on AI’s impact on labor, but Powell told lawmakers in June, while appearing before the Senate Banking Committee, that the Fed did not have the tools to address “the social issues and labor market issues that will arise” from AI.

    Ece Yildirim

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  • US Fed Slashes Interest Rates by 25 BPS: How Will Bitcoin’s Price React?

    In line with most expectations and its hint last month, the US Federal Reserve made the first interest rate cut for 2025, reducing it by 25 bps.

    Most market commentators believed crypto and the rest of the financial markets had already priced in this cut, so it would be interesting to follow how BTC will react in the following hours and days.

    Recall that the primary cryptocurrency exploded in late August during and after Jerome Powell’s speech from Jackson Hole, when the Fed chair hinted that the US central bank will finally cut the rates.

    Experts anticipated a 25 bps rate reduction during the subsequent FOMC meeting, which took place yesterday and today.

     

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    Jordan Lyanchev

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  • What to expect as Fed likely to make first interest rate cut since 2024



    What to expect as Fed likely to make first interest rate cut since 2024 – CBS News










































    Watch CBS News



    The Federal Reserve is set to announce its latest interest rate decision as economists expect the first cut since 2024. CBS News MoneyWatch correspondent Kelly O’Grady has more on what to expect.

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  • Appeals court rejects Trump’s bid to fire Fed Governor Lisa Cook

    (CNN) — President Donald Trump cannot remove Lisa Cook from the Federal Reserve’s Board of Governors for now, a federal appeals court said in an emergency ruling Monday, just hours before the central bank’s two-day monetary policy meeting was set to kick off.

    The decision from the US Court of Appeals for the District of Columbia Circuit, split 2-1 along party lines, marks another defeat for the White House’s efforts to control the Fed and economic policy. Trump has sought to oust Cook over allegations of mortgage fraud, though Cook has not been charged with any wrongdoing.

    The Federal Reserve Act specifies that presidents can only fire Fed governors “for cause,” and Trump has sought to leverage allegations of mortgage fraud as a sufficient cause for firing.

    “In this court, the government does not dispute that it failed to provide Cook even minimal process—that is, notice of the allegation against her and a meaningful opportunity to respond—before she was purportedly removed,” Judges Bradley Garcia and Michelle Childs wrote in their opinion.

    “The district court issued its preliminary injunction after finding that Cook is likely to succeed on two of her claims: her substantive, statutory claim that she was removed without ‘cause’… and her procedural claim that she did not receive sufficient process prior to her removal in violation of the Due Process Clause of the Fifth Amendment,” Garcia and Childs wrote.

    In his dissenting opinion, Judge Gregory Katsas wrote that “President Trump removed Cook for cause.”

    Cook’s attorneys did not respond to CNN’s request for comment following the ruling.

    White House spokesperson Kush Desai told CNN in a statement on Tuesday: “The President lawfully removed Lisa Cook for cause. The Administration will appeal this decision and looks forward to ultimate victory on the issue.”

    The court’s decision comes just weeks after Trump said he fired Cook, who responded by suing Trump based on “an unsubstantiated allegation” and that her firing violated her due process rights. If Trump is ultimately successful in removing Cook, it would mark the first time a Fed governor was fired by a president in the central bank’s 111-year history.

    At the same time the court ruled Trump couldn’t immediately fire Cook, Stephen Miran, Trump’s nominee to fill a separate seat on Fed’s Board, was confirmed by the Senate.

    Trump’s push to get the Fed to lower rates

    The Fed is widely expected to lower interest rates at the conclusion of their two-day policy meeting this week. However, it’s an open question how big the cut will be at this and upcoming meetings.

    Meanwhile, Trump’s push to oust Cook, a Biden appointee and the first Black woman to serve on the Fed’s Board, comes amid a campaign to get the central bank to lower interest rates.

    As part of that effort, Trump has tried unsuccessfully to bully Fed Chair Jerome Powell into lowering rates, calling him a “numbskull,” a “major loser” and “a very stupid person” for keeping rates elevated. He also threatened to fire him, but more recently has said he’d allow Powell to stay on until his term as chair ends in May.

    While seven out of 12 members of the Fed’s interest rate-setting committee are nominated by the president and confirmed by members of the Senate, the central bank for decades has functioned as an independent institution.

    Trump’s attempt to fire Cook raises serious concerns about the degree of independence the Fed will have moving forward.

    “President Trump’s attempted removal of Governor Lisa Cook, if allowed, would mark an immediate end to that history,” Cook’s attorneys wrote in a filing on Saturday. Economists have expressed similar concerns, arguing that the US economy’s success has been predicated on having an independent central bank, which helps instill confidence in domestic and foreign investors.

    The Fed was designed to be independent from politicians specifically so it could focus on economic data – and not political considerations – in achieving its dual mandate to keep price increases in check while supporting the job market.

    Politicians often prefer lower interest rates, aiming to boost stock prices and make it cheaper for people to borrow money, both popular moves among voters. But lower interest rates risk igniting price pressures. On the other hand, leaving rates too high could overly restrict spending and hiring, hurting the economy.

    Cook and her attorneys have argued that Trump’s use of “cause” is an attempt to get around a Supreme Court decision from earlier this year that appeared to limit the president’s ability to remove Federal Reserve governors.

    Trump, Cook argued in court papers, wants to redefine the meaning of “cause” in a way that would allow him to fire any board member “with whom he disagrees about policy based on chalked up allegations.”

    “President Trump does not have the power to unilaterally redefine ‘cause’ – completely unmoored to caselaw, history, and tradition – and conclude, without evidence, that he has found it,” Cook’s attorneys wrote.

    The Trump administration called Cook’s claims to stay on the board “meritless,” adding that concerns over whether Cook misrepresented her finances pose concerns as to “whether Cook can be trusted to act with forthrightness, care, and disinterest in managing the U.S. money supply.”

    This story has been updated with additional context and developments.

    Bryan Mena, Dan Berman and CNN

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  • How Far Could Donald Trump’s Assault on the Federal Reserve Go?

    After weeks of anticipation on Wall Street and elsewhere, policymakers at the Federal Reserve, which is one of the few remaining independent agencies that hasn’t yet fallen under the control of Donald Trump, will meet in the coming days to set a key interest rate. Trump has recently renewed his attacks on Jerome Powell, the chair of the Fed, following a sharp slowdown in job growth throughout the summer. He has also demanded a bigger rate cut than Powell and his colleagues on the Federal Open Market Committee (F.O.M.C.), which holds eight scheduled meetings each year to determine monetary policy, are likely to deliver, though that is the least of his efforts to exert control over the central bank.

    Last week, Senate Republicans moved to confirm Stephen Miran, the chair of Trump’s Council of Economic Advisers, to fill a short-term vacancy on the Fed’s Board of Governors. For now, Trump has backed off from his threats to fire Powell, whom he nominated in 2017 before turning against him shortly thereafter. But he is pressing ahead with his effort to oust another Fed governor, Lisa Cook, whom one of his minions, Bill Pulte, the director of the Federal Housing Finance Agency, has accused of mortgage fraud. Last week, a federal judge said Trump hadn’t “stated a legally permissible cause for Cook’s removal,” and allowed her to remain in her role. The Administration promptly appealed the ruling, asking a circuit court to allow it to forge ahead with Cook’s dismissal before the meeting, which starts on Tuesday.

    Policy disputes between Presidents and the Fed aren’t new, though we are witnessing something unprecedented. Until now, the most contentious showdown between the White House and the Fed came in January, 1951, when President Harry Truman summoned the members of the F.O.M.C. to the White House for a dressing-down. Then, as now, the source of the dispute was the President’s demand for low borrowing costs, but the context was very different.

    In April, 1942, shortly after the United States entered the Second World War, the Fed agreed to peg short-term rates at three-eighths of one per cent and long-term rates at 2.5 per cent. To enable the U.S. government to finance a huge expansion in defense spending, the Fed created large sums of money and used it to purchase Treasury bonds, an action that buoyed bond prices and kept their yields low. Large-scale monetary expansions are often associated with inflation, but wartime price controls helped keep price rises in check. In the postwar years, however, inflation picked up, and the United States’ entry into the Korean War, in June, 1950, heightened inflationary pressures. By the start of the following year, prices were increasing at an annual rate of about twenty per cent.

    These developments alarmed Fed officials, many of whom wanted to raise interest rates to bring down inflation. In testimony on Capitol Hill, the Fed chairman at the time, Marriner S. Eccles, who had been appointed by Franklin D. Roosevelt during the Great Depression, described the interest-rate cap as “an engine of inflation.” But Truman, who had one eye on preserving the value of war bonds that many Americans had purchased, was determined to keep it in place. He convened the F.O.M.C. members, and argued that raising rates could jeopardize the financing of the Korean War and the global fight against Communism. The next day, the White House and the Treasury Department announced that the Fed had agreed to maintain its existing policy for the duration of the security emergency. But the members of the F.O.M.C. had agreed to no such thing.

    When reporters from the New York Times and the Washington Post called Eccles, he told them this, and the outlets reported his comments without attribution. The dispute was now out in the open, and the Truman White House was shown to have misled the public. Eccles also released to the press an internal Fed memorandum that recorded the details of the meeting. As Eccles put it later on, “the fat was in the fire.”

    For a month, the dispute escalated. Tense meetings were held. Various senators got involved. The Fed informed the Treasury that it was “no longer willing to maintain the existing situation in the Government security market.” Eventually, the White House and the Treasury backed down. The then Treasury Secretary, John W. Snyder, had been sidelined by an illness, so one of his top lieutenants, William McChesney Martin, negotiated a compromise with the Fed; the deal was finalized in early March. Under this agreement, which came to be known as the Treasury-Fed Accord, the central bank agreed to keep a key interest rate fixed until the end of the year, but it no longer committed to a permanent cap. Effectively, it was free to concentrate on fighting inflation.

    Soon after, Truman appointed Martin as Fed chair, intending to have his own man in place. But, rather than catering to Truman’s desire for a cheap-money policy, Martin acquired a reputation as an inflation hawk. (It was he who likened the Fed’s role to removing the drinks when the party gets raucous.) Years later, according to an informative history of the dispute that was published in 2001 by the Federal Reserve Bank of Richmond, one of twelve regional reserve banks in the U.S., the two men ran into each other on a New York street; Truman looked at Martin, “said one word, ‘traitor,’ and then continued.”

    After reading this history last week, I called up Jeffrey Lacker, an economist who was president of the Richmond Fed from 2004-17 and who also served as a member of the F.O.M.C. under Alan Greenspan and Ben Bernanke. (The voting members of the committee consist of seven Fed governors and five regional Fed presidents.) Lacker is a student of the Fed’s history, and a fervent believer in its independence. “Truman had to sue for peace when he was discovered to have lied to the press about the compliance of the F.O.M.C. with his desires,” he told me. “Whether such shaming is an effective mechanism in this climate is not so clear at all.”

    John Cassidy

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  • Trump administration moves forward with push to fire Fed governor Lisa Cook

    (CNN) — The Trump administration on Sunday renewed its request to a federal appeals court to fire Lisa Cook, a Federal Reserve governor who has faced political scrutiny in recent weeks.

    The move comes ahead of the independent central bank’s vote on interest rates this week. President Donald Trump has repeatedly called for the Fed to slash interest rates while publicly targeting Fed chair Jerome Powell.

    The Trump administration filed its request to the US Court of Appeals for the District of Columbia ahead of Sunday’s 3 p.m. ET deadline.

    The Trump administration called Cook’s claims to stay on the board “meritless,” adding that concerns over whether Cook misrepresented her finances pose concerns as to “whether Cook can be trusted to act with forthrightness, care, and disinterest in managing the U.S. money supply.”

    Lowell & Associates, which is representing Cook, did not respond to CNN’s request for comment

    On Saturday, Cook’s legal team requested that the court reject Trump’s bid to remove her from the board because the administration did not show sufficient cause to fire her. Cook’s lawyers also argued that allowing her to be fired threatens the bank’s independence and the nation’s economic stability.

    “As economists have warned, everyday Americans ultimately would pay the price: higher prices ‘via higher inflation and higher interest rates’ that result ‘when central bank independence is lost,’” Cook’s lawyers said.

    Cook has been under fire for accusations of mortgage fraud, which were launched by Federal Housing Finance Agency Director Bill Pulte. Trump said on August 25 that he would remove Cook from her position because of the accusation.

    Auzinea Bacon and CNN

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  • Bessent met with BlackRock’s Rieder as search for next Fed chair continues, source says

    By Andrea Shalal

    WASHINGTON (Reuters) -U.S. Treasury Secretary Scott Bessent met with BlackRock Inc executive Rick Rieder in New York on Friday, as the Trump administration continued its search for a new chair for the Federal Reserve, a source familiar with the matter said.

    Bessent has now spoken with four of the 11 candidates on the administration’s list of candidates to replace Fed chair Jerome Powell, whose term expires in May, the source said.

    Bloomberg first reported Bessent’s meeting with Rieder, BlackRock’s CIO of fixed income, and called him a rising contender for the post. The two met for two hours and discussed monetary policy, the Fed’s organizational structure and regulatory policy, it said.

    U.S. President Donald Trump had told reporters at the White House a week ago that his short list for the job included his aide Kevin Hassett, former Fed Governor Kevin Warsh and current Fed Governor Christopher Waller.

    At the time, Trump said he had eyed Bessent for the job, but the Treasury secretary declined.

    Bessent has said he will meet with the candidates to whittle down the list and present Trump with a list of top contenders.

    TRUMP HAS RAILED AGAINST POWELL

    Trump has made clear he intends to install a Fed leader more aligned with his push for rapid interest-rate cuts after months of railing against Powell for being “too late” to lower interest rates and bring down borrowing costs.

    Powell’s Fed has kept rates on hold all year on concern that Trump’s tariffs could reignite inflation, although his concerns have shifted recently to focus more on the slowing labor market.

    The U.S. Senate is slated to vote on Monday to confirm White House Council of Economic Advisers Chair Stephen Miran to the Fed, which starts a two-day meeting Tuesday at which it is expected to cut its policy rate by a quarter of a percentage point. Miran will retain his White House job, but take an unpaid leave while at the Fed.

    Miran would replace Adriana Kugler, who was appointed by former President Joe Biden and resigned as Fed governor last month.

    Trump has sought to fire another Fed governor appointed by Biden, Lisa Cook, but that move has been blocked for now by a federal judge.

    (Reporting by Andrea Shalal; editing by Edward Tobin)

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  • The August jobs report has economists alarmed. Here are their 3 top takeaways.

    Many economists say Friday’s disappointing jobs report is sending warning signals about the pace of hiring across the U.S. and the broader health of the economy. 

    Employers added only 22,000 nonfarm jobs in August, far short of Wall Street analyst forecasts of 80,000, while the nation’s unemployment rate rose to 4.3% — the highest level since October of 2021, when the economy was still reeling from the effects of the pandemic. In 2024, the economy added an average of 168,000 per month, labor data shows.

    The job market is faltering partly because of the Trump administration’s tariffs, which are heightening economic uncertainty, boosting costs for importers and complicating business planning.. Some economists also think that rapid employer adoption of artificial intelligence is hurting demand for recent college graduates and other entry-level workers, although there is ongoing debate among researchers about how much AI is affecting job growth.

    “Uncertainty makes it very, very difficult for people in companies to make decisions,” Laura Ullrich, director of economic research for North America at job-search firm Indeed and a former official at the Federal Reserve Bank of Richmond, told CBS MoneyWatch. “My former boss says that when you are driving through fog, you slow down — but if it gets thick enough, you pull over.”

    The Trump administration defended its trade and other economic policies, expressing confidence they will eventually drive growth.

    “President Trump’s trade deals have unlocked unprecedented market access for American exports to economies that in total are worth over $32 trillion with 1.2 billion people,” White House spokesman Kush Desai said in a statement to CBS MoneyWatch. “As these unprecedented trade deals and the administration’s pro-growth domestic agenda of deregulation and historic working-class tax cuts take effect, American businesses and families alike have the certainty that the best is yet to come.” 

    In response to the jobs report, President Trump on Friday posted on social media that Federal Reserve Chair Jerome Powell should have moved sooner to cut interest rates. Lower borrowing costs can stimulate job growth by driving consumer spending and making it cheaper for businesses to expand their operations.

    “Jerome ‘Too Late’ Powell should have lowered rates long ago. As usual, he’s ‘Too Late!’,” the president wrote.

    Here are three key takeaways from economists about the latest employment figures. 

    The job market is stalling 

    Overall hiring in August was far weaker than economists expected. More troubling, the numbers look considerably worse after stripping out the two sectors that showed some of the strongest growth in August — health care and social assistance. Health care companies created 31,000 new jobs last month, while social assistance — employers such as food banks and those providing services for disabled people, children and low-income families — added 16,000 new jobs. 

    But many other sectors had stagnant or even declining job growth, such as manufacturing, which shed 12,000 jobs in August, and professional and business services, which lost 17,000. 

    “Absent the secular gains in health care and social assistance, the cyclical categories of the private service sector (excluding health care and social assistance) have collectively turned negative on average in the past four months,” Nationwide chief economist Kathy Bostjancic said in a report Friday. 

    Hiring this summer was also weaker than previously thought. The Labor Department’s latest data shows employers cut 13,000 jobs in June, rather than adding 14,000 new hires as the agency had reported in its first estimate for that month. The June drop marks the first decline in monthly jobs since late 2020.

    Although July payroll gains were revised up slightly, total job growth for June and July was 21,000 lower than previously reported, according to the Labor Department. 

    Job growth is at its lowest level in 15 years

    The average monthly job gains since January represent the fewest jobs added over the first eight months of the year in 15 years, excluding the pandemic-triggered crisis period of 2020, Indeed’s Ullrich noted.

    “We haven’t added this few jobs since 2010, and we have 17 million more people in the labor market than we did then,” she said. “That, to me, is a staggering headline.”

    That loss of momentum in creating new jobs is raising concerns about the overall strength of the economy. The nation’s gross domestic product — the total value of goods and services — is expanding more slowly than in 2024, while inflation remains above the Federal Reserve’s annual growth target of 2%. 

    That combination has caused some economists to warn about the risk of the U.S. entering a period of “stagflation,” a toxic mix of high prices and weak growth. Forecasters expect Consumer Price Index data for August, which is set to be released next week, to show inflation rising at an annual rate of 2.9%, according to financial data firm FactSet.

    “Concerns about the health of the economy are starting to creep in,” Seema Shah, chief global strategist at Principal Asset Management, said in an email. “Equally, a strong inflation print next week could strike new fears about a stagflationary mix.”

    The Fed is highly likely to cut interest rates this month

    Across the board, economists on Friday said the subpar August jobs report virtually locks in a Federal Reserve interest-rate cut when policymakers meet on Sept. 17.  The question is by how much. 

    August hiring was so anemic that some economists now think the Fed could opt for a 0.5 percentage point cut — double the typical rate cut — in a bid to keep the job market on track. Traders now see a 10% chance of a jumbo cut and a 90% likelihood of a 0.25 percentage point reduction, according to CME FedWatch. Prior to Friday’s jobs report, the market was completely discounting a jumbo cut, the tool shows. 

    Some economists also think the Fed will continue trimming rates later in 2025 to counter the weak job market. 

    “With the weak job growth, the Fed is cleared to cut rates in September. The question is whether we get [0.25 or 0.50 percentage points],” Scott Helfstein, Global X’s head of investment strategy, said in an email. “We continue to believe the Fed will ease into the cutting cycle here with one rather than two, but there is some latitude here.”

    Aimee Picchi

    Aimee Picchi is the associate managing editor for CBS MoneyWatch, where she covers business and personal finance. She previously worked at Bloomberg News and has written for national news outlets including USA Today and Consumer Reports.

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  • Trump news at a glance: Bessent says markets not worried by Fed interference as Lagarde warns of ‘danger’

    US treasury secretary Scott Bessent talks about the independence of the Federal Reserve in an interview with Fox News.Photograph: Jacquelyn Martin/AP

    US treasury secretary Scott Bessent has said the Federal Reserve is and should be independent but that it had “made a lot of mistakes”, as he defended Donald Trump’s right to fire the central bank governor Lisa Cook.

    The president has criticised the Fed and its chair, Jerome Powell, for months for not lowering interest rates. Independent central banks are widely seen as crucial to a stable global financial system. Bessent also rejected the idea that markets were disturbed by the Trump administration’s actions. “S&P’s at a new high and bond yields are fine, so we haven’t seen anything yet,” he said.

    Bessent’s comments come as Christine Lagarde, the president of the European Central Bank (ECB), said Trump undermining the independence of the world’s most powerful central bank could pose a “very serious danger” for the world economy.

    Lagarde, who was France’s finance minister until 2011 before leaving to run the International Monetary Fund, said it would be “very difficult” for Trump to take control of Fed decision-making on interest rates, but such a scenario would be highly dangerous.

    “If US monetary policy were no longer independent and instead dependent on the dictates of this or that person, then I believe that the effect on the balance of the American economy could – as a result of the effects this would have around the world – be very worrying, because it is the largest economy in the world,” she said, according to remarks reported by Reuters.

    Read the full story

    Guatemala is ready and willing to receive about 150 unaccompanied children of all ages each week from the US, the country’s president has said, a day after a US federal judge halted the deportation of 10 Guatemalan children.

    Those children had already boarded a plane when a court responded to an emergency appeal on Sunday. They were later returned to the custody of the Office of Refugee Resettlement.

    On Monday, Guatemala’s president, Bernardo Arévalo, told journalists that his government had been coordinating with the US to receive the unaccompanied minors.

    Read the full story

    Nine former officials at the Centers for Disease Control and Prevention have said that Robert F Kennedy Jr’s leadership of the US health and human services department is “unlike anything our country has ever experienced” and “unacceptable”. They also warned that Kennedy’s leadership “should alarm every American, regardless of political leanings”.

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  • 7/27: Face the Nation

    This week on “Face the Nation with Margaret Brennan,” director of the U.S. Office of Management and Budget, Russell Vought, joins to discuss President Trump’s trip to a Federal Reserve facility with Fed Chair Jerome Powell ahead of his departure for Scotland. Meanwhile, The Ohio State University President Ted Carter joins to explain how he’s handling a new era of higher education amid the Trump administration’s push to assert control over private and public institutions across the U.S.

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  • Here are the biggest takeaways from the government’s latest inflation data

    Inflation continued to run hot in July, underlining the Federal Review’s dilemma as it looks to lower prices for American consumers while propping up a job market that is starting to wobble. 

    Prices across the U.S. rose at an annual rate of 2.6% last month, according to personal consumption expenditures data released on Friday. That’s the same figure as in June, a sign inflation remains persistent. Stripping out volatile food and energy prices, inflation in July actually ticked up to 2.9% from a year ago, up from 2.8% in June.

     Read on for a breakdown of Friday’s PCE report.

    How are consumers faring?

    The latest PCE data shows that consumer spending rose 0.5% in July, suggesting that Americans are continuing to open their wallets even in the face of economic uncertainty.

    But while people continue to spend, many consumers are increasingly having to make trade-offs on what they spend their money on, Gregory Daco, chief economist at EY-Parthenon, told CBS MoneyWatch. 

    “Consumers are trying to push through — they’re doing the best they can, but they’re increasingly under pressure, and therefore they’re being more cautious with discretionary outlets,” he said. “They travel less. They spend less on restaurants, spend more cautiously on transportation.”

    Such caution can augur a deeper slump given that consumer spending accounts for roughly two-thirds of economic activity. The closely watched University of Michigan consumer sentiment survey, released Friday, showed that Americans are increasingly concerned about inflation. 

    How fast are prices rising? (Line chart)

    Although inflation has cooled significantly since peaking in 2022, it remains stubbornly above the Fed’s 2% annual target. And consumers continue to feel the pain in the form of higher prices for some groceries as well as rising electricity costs. Another key inflation gauge — the Consumer Price Index — shows that the price of coffee was up 14.8% from a year ago, while beef and egg costs were 15.5% and 16.4%, respectively. 

    Are tariffs impacting inflation?

    Not yet. In a positive sign, the price of goods, which are most susceptible to tariffs than services, cooled slightly in July, the PCE data shows, decreasing 0.1% from the month prior. That suggests tariffs have had a minimal impact on prices so far.

    “It’s not showing up in a goods prices, in the government statistics at least,” Adam Crisafulli, head of Vital Knowledge, told CBS MoneyWatch.

    Still, analysts say inflation could bare its teeth more in the coming months as U.S. tariffs start to trickle through the economy. 

    “We continue to expect tariffs to take a growing bite out of growth in real income and real consumer spending,” Nancy Vanden Houten, lead U.S. economist at Oxford Economics, told investors in a report. 

    A critical question facing the economy is whether any tariff-induced inflation amounts to a one-time boost to prices or results in a more prolonged increase. Fed Chair Jerome Powell laid out the scenarios in a speech in Jackson Hole, Wyoming, earlier this month, noting that even if inflation does end up being a “one-time” scenario, it will still “take time for tariff increases to work their way through supply chains and distribution networks.”

    What does the latest inflation data mean for a Fed rate cut?

    Most Wall Street analysts think the latest inflation figures keep the Fed on track to lower interest rates at its Sept. 16-17 meeting. 

    “Today’s numbers on both the personal consumption, expenditure, and income and spending, were right down the middle of the fairway,” said Art Hogan, chief market strategist for B. Riley Wealth. “This leaves the door wide open for the Fed to cut rates in September, and likely again in October and in December.”

    Traders put the likelihood of a rate cut at 87%, according to CME Group’s FedWatch tool. 

    Mary Cunningham

    Mary Cunningham is a reporter for CBS MoneyWatch. Before joining the business and finance vertical, she worked at “60 Minutes,” CBSNews.com and CBS News 24/7 as part of the CBS News Associate Program.

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  • Trump official lodges new criminal referral against Fed Governor Lisa Cook

    (CNN) — A Trump administration housing official has sent a new criminal referral to the Justice Department against Federal Reserve Governor Lisa Cook, as she sues the administration to fight the president’s efforts to fire her.

    The new criminal referral, made late Thursday and revealed in a social media post by Federal Housing Finance Agency director Bill Pulte, alleges Cook identified a property in Cambridge, Massachusetts, as a second home on official documents, but instead used it as an investment property.

    Cook, the first Black woman to serve as a Fed governor, has filed a lawsuit challenging President Donald Trump’s firing of her earlier this week. A hearing on that suit took place Friday morning.

    The battle over Cook’s job is about more than one position: The nation’s central bank operates independently so that officials can make economic decisions without pressure over political considerations. Trump’s attempts to fire Cook – and to force the bank to cut interest rates – get to the heart of the question about the Fed’s independence and whether Trump’s presidential powers have limits.

    The Fed has been resistant to cutting rates this year, citing Trump’s tariffs and their potential to raise inflation. Trump, however, has repeatedly demanded lower borrowing costs, often lobbing personal insults in the process.

    Cook has not been charged with any crimes.

    At the Friday hearing on her civil suit, her attorney, Abbe Lowell argued the mortgage fraud allegations are a pretext because of Trump’s political ire with the Fed for not lowering interest rates.

    In a statement to CNN, Lowell denied there was any validity to the allegations against his client.

    “This is an obvious smear campaign aimed at discrediting Gov. Cook by a political operative who has taken to social media more than 30 times in the last two days and demanded her removal before any review of the facts or evidence,” Lowell said in the statement. “Nothing in these vague, unsubstantiated allegations has any relevance to Gov. Cook’s role at the Federal Reserve, and they in no way justify her removal from the board.”

    In court Friday in Cook’s civil case, the Justice Department didn’t acknowledge any criminal investigation it may be conducting.

    But lawyers for the department have argued to a judge weighing the legality of her firing that “a Governor’s failure to carefully read her own financial documents casts a shadow over the Federal Reserve’s decisions,” according to a Justice Department court filing this week.

    Still, the Justice Department has tasked Ed Martin—whom the attorney general is using as a special investigator for a smattering of politically charged allegations that President Donald Trump is interested in—to look into the allegations around Cook, according to a person familiar with the investigation.

    Many of Trump’s attacks on the Fed have been focused on Fed Chair Jerome Powell, whom he appointed during his first term in office, and who was reappointed to another term under President Joe Biden.

    Trump has not tried to remove Powell, despite threats that he might do so. Some of those threats prompted a sell-off in US equity markets by investors concerned about Fed independence. The president does not have the power to remove a member of the Fed Board except “for cause,” not just because of a disagreement over monetary policy. But Trump used the allegations of mortgage fraud against Cook as justification for her removal.

    In the Thursday referral to the DOJ, Pulte described the new allegations as “extremely troubling.”

    “Second homes receive lower mortgage costs than investment properties, because investment properties are inherently riskier,” he wrote.

    The FHFA had already made a criminal referral alleging that Cook committed mortgage fraud by getting mortgages for two different properties, one in Michigan, another in Georgia, and claiming on both mortgages that they would be her primary residence.

    This story has been updated with additional reporting and context.

    – CNN’s Jeremy Herb, Phil Mattingly and Evan Perez contributed to this report.

    Chris Isidore and CNN

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  • Fed board member Lisa Cook sues to block Trump’s attempt to fire her

    Washington — Federal Reserve Governor Lisa Cook filed suit against President Trump, Chair Jerome Powell and the Fed’s Board of Governors on Thursday, asking a federal judge to block the president’s attempt to fire her from the central bank.

    Mr. Trump announced Cook’s termination from the Fed late Monday, citing allegations she had committed mortgage fraud, which he described as “deceitful and potentially criminal.” The move came after the president spent months railing against the Fed and Powell for leaving interest rates relatively high so far this year.

    Cook filed her lawsuit in the U.S. District Court for the District of Columbia on Thursday, teeing up a legal showdown that seems destined to ultimately be settled by the Supreme Court. Her legal team asked the district court to declare that Mr. Trump’s attempted firing is “unlawful and void” and that Cook “remains an active member of the Board of Governors of the Federal Reserve.”

    “Governor Cook seeks immediate declaratory and injunctive relief to confirm her status as a member of the Board of Governors, safeguard her and the Board’s congressionally mandated independence, and allow Governor Cook and the Federal Reserve to continue its critical work,” the suit said.

    Members of the Fed board are confirmed by the Senate and serve for 14-year terms. Under the Federal Reserve Act of 1913, the president can only remove them early “for cause.” The law doesn’t specify what qualifies as “cause,” and it has never been tested in court, but it is generally understood to be malfeasance.

    In her suit, Cook’s lawyers Abbe Lowell and Norm Eisen asked the court to state that Fed board members “can only be removed for cause, meaning instances of inefficiency, neglect of duty, malfeasance in office, or comparable misconduct,” citing Supreme Court precedent. Even if the court disagrees with that standard, they wrote, the law “clearly does not support removal for policy disagreements.”

    Powell and the Fed board are named in the suit because Cook asked the court for an injunction ordering them to “refrain from effectuating President Trump’s illegal attempt to fire Governor Cook and treat Governor Cook as a member of the Board of Governors.”

    In response to the lawsuit, White House spokesman Kush Desai said the president “exercised his lawful authority” in removing Cook.

    “The President determined there was cause to remove a governor who was credibly accused of lying in financial documents from a highly sensitive position overseeing financial institutions,” Desai said in a statement. “The removal of a governor for cause improves the Federal Reserve Board’s accountability and credibility for both the markets and American people.”

    The Trump administration has argued in the past that the president has the legal right to remove at will members of federal boards that exercise “substantial executive power,” like the National Labor Relations Board.

    The Supreme Court has upheld Mr. Trump’s power to fire some board members, but said in May that the Federal Reserve is a separate case, calling it a “uniquely structured, quasi-private entity.”

    Earlier this month, the Trump-appointed director of the Federal Housing Finance Agency, Bill Pulte, accused Cook of falsifying mortgage documents by claiming two homes that she bought in 2021 as her primary residence. He alleged that Cook — an economist who has served on the Fed board since 2022 — had committed mortgage fraud, and referred the matter to Attorney General Pam Bondi and Justice Department special attorney Ed Martin.

    Days later, Mr. Trump publicly called on Cook to resign.

    At the time, Cook didn’t address the substance of Pulte’s allegations directly, but said in a statement that she had “no intention of being bullied to step down from my position because of some questions raised in a tweet.” She added that she would “take any questions about my financial history seriously” and said she was gathering more information.

    Lowell, her lawyer, said Monday that Mr. Trump didn’t have the legal right to fire Cook “based solely on a referral letter” to Justice Department leadership, a point her legal team reiterated in Thursday’s lawsuit.

    “[R]emoval ‘for cause’ requires some connection to official conduct, prohibiting removal based on an unsubstantiated allegation of private misconduct (which in this case allegedly occurred prior to her Senate confirmation),” the complaint said. “And even to the extent that private misconduct could bear on a particular officer’s official conduct in certain cases, ’cause’ requires a factual basis supporting such asserted misconduct.”

    The broadside against Cook came as Mr. Trump pressures the Fed to lower interest rates. The central bank’s rate-setting committee — which Cook and Powell both sit on — has opted to leave interest rates relatively high so far this year, fearing that inflation could resurge. Last week, Powell hinted that the central bank may cut rates soon, but it will “proceed carefully.”

    The president favors immediate rate cuts, which could boost economic growth and make it cheaper to borrow money, though at the risk of causing higher inflation. He has floated firing Powell at various times over the past few months and has encouraged other Fed officials to overrule him and slash rates.

    The Fed typically makes interest rate decisions independently. Mr. Trump is hardly the first president to criticize the Fed for leaving rates high, but he’s been unusually assertive. Last year, he argued he should have “at least [a] say” in the moves made by the central bank.

    Many experts believe it’s important for central banks to operate independently so they can make decisions based on economic data, not politics. If elected officials are in charge of monetary policy, they could opt for the politically popular short-term benefits of low interest rates — like a hotter economy and cheaper borrowing costs — even if that leads to higher inflation in the long run, Brookings Institution senior fellow David Wessel noted earlier this year.

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